Prices & supplies - May 8

High oil prices seen spurring alternative fuel shiftChris Baltimore, Reuters Record U.S. crude oil futures near $124 a barrel have reached a "break point" that will spur a shift away from an oil-centric transportation sector toward alternatives, energy analyst Daniel Yergin said on Wednesday.

Yergin, chairman of Cambridge Energy Research Associates, told Reuters that U.S. crude oil prices -- which hit a record $123.93 a barrel on Wednesday -- will hasten the adoption of cellulosic biofuels made from switchgrass and woodchips, as well as battery-powered cars and fuels derived from coal. (7 May 2008)Suggested by contributor "driller".

the Times incorrectly reported that Greenland has 47 billion barrels of ‘estimated oil reserves’ (‘Global warming could help Greenland to independence’, 7 May), which is wrong on two counts.

First, the 47 billion estimate comes from a study by the United States Geological Survey published in 2000 which estimated not reserves (amounts of oil that have been proved to exist by exploration), but the amount of oil that might be discovered in future, a much more speculative figure. Second, after gaining access to new geological data, in August 2007 the USGS slashed its estimate for Greenland to less than 9 billion barrels.

The original USGS estimate was part of worldwide oil assessment that has now been widely discredited as wildly overoptimistic. In a further study published in 2005, the USGS was forced to acknowledge that while the original assessment implied worldwide oil discovery of 22 billion barrels per year until 2025, in reality the industry has been finding only 9 billion annually - 60% less than forecast. If this underperformance continues, the USGS global estimate for future oil discovery is 500 billion barrels too high. (7 May 2008)

Analyst sees oil surging to $200Dan Healing, Calgary Herald Oil could shoot to $200 US within the next two years as part of a "super-spike," investment bank Goldman Sachs said Tuesday, as crude cruised to a record price north of $122 per barrel and at least one Calgary station briefly advertised regular gasoline at a record $1.29 per litre.

It's an oil forecast that's gaining in popularity -- and a prospect analysts and economists agreed would lead to a global slowdown, a deep U.S. recession and higher prices for consumers in Canada on everything from gas to food.

"We believe the current energy crisis may be coming to a head, as a lack of adequate supply growth is becoming apparent," U.S.-based Goldman analyst Arjun Murti said in a research note. (7 May 2008)

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